The Hindu Business Line : Special package will revive coffee sector, says Elangovan

THE Union Government is quite optimistic that its May 2004 coffee package would help revive the coffee sector and improve the financial position of the growers on the back of the distinct and tangible improvement in the domestic and export prices of coffee.

The Minister of State for Commerce and Industry, Mr E.V.K.S. Elangovan, said this in a statement in the Lok Sabha in response to a calling attention motion by the JD (U) member Mr M.P. Veerendrakumar pleading for "a comprehensive package to help the coffee sector in the country, particularly the small growers in Kerala, Karnataka and Tamil Nadu, and the steps taken by the Government in this regard."

The Minister recalled that a Special Coffee Term Loan (SCTL) was put in place in 2002 under which various types of loans, including interest, were consolidated into a single-term loan, with a number of concessions, including a moratorium on the repayment of the principal for a period of three years starting 2002-03.

In spite of this package, the problems of low returns to the growers persisted and the Government approved another relief package in May 2005.

This package was primarily aimed at debt amelioration to bail out the coffee industry from its crisis.

The package included, among others, sharing the total interest burden on SCTL, estimated to be Rs 287.10 crore, for three year moratorium period equally; among the banks, the Government and the grower loanees to the extent of one-third each, and directing the banks to lower the interest rats charged on SCTL from the extant 11 to nine per cent or the rate applicable to agriculture sector whichever is lower during the remaining repayment period of SCTL loans.

The Minister said the grower community broadly hailed this package. Moreover, this year, the international and domestic prices of coffee had improved.

The average Indian Coffee Trade Association (ICTA) price for the period January to October 2005 was roughly Rs 106 a kg for arabica (plantation A) and Rs 53 per kg for robusta (cherry AB).

Mr Veerendrakumar pointed out that when he was a Minister during the V.P. Singh Government the small growers' loans were waived, and said SCTL's stipulation of asking growers to bear one-third of the loans at a time when their operations had become uneconomical due to continued poor returns needs to be dropped. He said the SCTL scheme was a failure.

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